How long does it take college graduates to recoup higher education costs? It depends on what they study.
A new report from the California Futures Foundation and the HEA Group examined 260,000 California college graduates across 2,695 undergraduate certificate, associate and bachelor’s degree programs offered at 324 institutions within the state. It measured students’ earnings five years after they earned their credentials.
There was good news: 88% of programs allow graduates to recoup their educational costs in five years or less. Plus, more than one-third (34%) of college programs allow their graduates to recoup their costs in less than 12 months.
Looking at degree level, typically, graduates of associate degree programs recoup their educational costs more quickly than others. Nine out of 10 (91%) associate degrees allow graduates to earn back their educational costs within five years. Even better, 65% allow these graduates to recoup their costs within just one year’s time.
Though bachelor’s degrees take longer to complete and cost more, most bachelor’s degree programs (92%) still allow graduates to earn back their costs in less than five years.
Certificate programs, on the other hand, are considered the “riskiest credentials,” according to the report, as they are “most likely to result in a lower earnings premium and longer payback period.” In fact, for 34% of certificate programs, graduates needed five years or more to recoup their educational costs. And 23% of these programs lead to many of their graduates earning less than someone with no college experience.
The report does add that, “While a few of these low-value certificate programs are offered at public institutions, many are concentrated within the for-profit sector.”
High, low ROI
For associate degrees, program popularity correlates well with the program’s return on investment (ROI). Many even enable graduates to recoup their costs in less than a year. (See graphs, below.)
The most popular associate degree programs for California students include liberal arts and sciences, registered nursing, allied health programs and business. For liberal arts and sciences associate degree programs, graduates earn back the degree costs within five years at 95% of the institutions that offer it. And 98% of registered nursing programs pay off in less than a year.
Graduates who earned degrees in the allied health and medical assisting services field didn’t do quite as well. Nearly 80% of programs within this field pay off within five years, but for 6%, there’s “no economic ROI.”
Among the most popular certificate programs, those with the highest ROIs are vehicle maintenance and repair technologies and practical nursing, vocational nursing and nursing assistants.
There is almost no ROI for cosmetology programs – 96% leave their graduates with no economic premium on their investment. Another popular certificate program, dental support services, also does not guarantee a return on investment.
The most popular bachelor’s degree programs – business administration, psychology, sociology, communications/media studies and nursing – mostly pay off within five years, with nursing programs paying off the quickest (69% within one year).
Within the report’s appendix also is a list of colleges and degree programs in California from shortest ROI to longest. Not surprisingly, many community colleges’ registered nursing programs show quick earnings.
Variance by sector
The type of Institution also makes a difference. Almost all programs offered at public institutions (97%) in California show their graduates can earn back the costs of obtaining a credential within five years and 48% allow this within one year.
Private non-profits take longer for graduates to recoup costs, but more than 80% of programs can lead to grads recouping costs within five years. At for-profit institutions, only 60% of programs provide an ROI within five years, and 17% have no ROI.
